Westlake Chemical Corporation Announces First Quarter 2017 Earnings

Earned quarterly net income of $138.2 million, or $1.06 per diluted
share

Record quarterly sales and EBITDA of $1,942.6 million and $390.6
million, respectively

Completed the expansion of the Calvert City, Kentucky ethylene unit
which, along with other incremental capacity increases, added 100
million pounds of annual capacity

HOUSTON--(BUSINESS WIRE)--May 2, 2017--
Westlake Chemical Corporation (NYSE: WLK) today reported net income for
the three months ended March 31, 2017 of $138.2 million, or $1.06 per
diluted share, on net sales of $1,942.6 million. This represents an
increase in net income of $15.1 million, or $0.12 per diluted share,
compared to the quarter ended March 31, 2016 net income of $123.1
million, or $0.94 per diluted share, on net sales of $975.2 million. Net
income for the first quarter of 2017 increased as compared to the
prior-year period primarily due to higher sales prices for our major
products, resulting in improved margins; earnings contributed from
Axiall, which was acquired on August 31, 2016; and a lower first quarter
2017 effective tax rate, primarily due to certain discrete adjustments
that had an impact of $4.0 million, or $0.03 per diluted share, and a
lower estimated annual tax rate for 2017. These increases were partially
offset by 1) pre-tax unabsorbed fixed manufacturing costs and other
costs associated with the turnaround and expansion of the Calvert City
ethylene unit and other planned turnarounds and unplanned outages
totaling approximately $36.3 million, or $0.19 per diluted share, 2)
lost sales associated with such outages, 3) higher interest expense, and
4) pre-tax transaction and integration-related costs of approximately
$8.2 million, or $0.04 per diluted share, associated with the Axiall
acquisition. Net sales for the first quarter of 2017 increased by $967.4
million compared to net sales for the first quarter of 2016, mainly due
to sales contributed by Axiall and higher sales prices for our major
products. Income from operations was $235.3 million for the first
quarter of 2017 as compared to $202.3 million for the first quarter of
2016. The increase in income from operations for the first quarter of
2017 was mainly a result of higher sales prices for most of our major
products, resulting in higher integrated product margins, and earnings
contributed by Axiall. These increases were partially offset by the
costs associated with the Calvert City ethylene unit turnaround and
expansion, and other planned turnarounds.

First quarter 2017 net income of $138.2 million, or $1.06 per diluted
share, increased $39.3 million from the $98.9 million, or $0.76 per
diluted share, reported in the fourth quarter of 2016. Net sales for the
first quarter of 2017 of $1,942.6 million were higher than the $1,735.2
million reported in the fourth quarter of 2016, mainly due to higher
sales volumes for all of our major products and higher sales prices for
caustic and North American polyvinyl chloride (“PVC”) resin. Income from
operations for the first quarter of 2017 of $235.3 million was higher
than the $152.7 million reported in the fourth quarter of 2016. Income
from operations in the first quarter of 2017 benefitted from higher
sales volumes for all of our major products, improved olefin and vinyls
integrated margins, and lower integration costs as compared to the
fourth quarter of 2016. The fourth quarter of 2016 was negatively
impacted by $13.8 million resulting from the impact of selling higher
cost Axiall inventory at fair value following the acquisition.

"We delivered good results for the first quarter of 2017 as global
demand and margins for our major products remain strong," said Albert
Chao, President and Chief Executive Officer. "Thanks to the dedication
and efforts of our employees, we have made progress on identifying and
initiating the investments that are necessary to improve the reliability
and operational efficiency of our Axiall assets. We also remain focused
on our integration activities and are on track to capture significant
synergies in 2017."

Net cash provided by operating activities was $157.4 million for the
first quarter of 2017 and capital expenditures for the first quarter of
2017 were $134.3 million. As of March 31, 2017, we had cash, cash
equivalents and restricted cash of $381.9 million and long-term debt was
$3,601.6 million.

Earnings before interest expense, income taxes, depreciation and
amortization (EBITDA) of $390.6 million for the first quarter of 2017
increased $120.0 million compared to EBITDA of $270.6 million reported
in the first quarter of 2016. EBITDA for the first quarter of 2017
increased $83.1 million compared to EBITDA of $307.5 million in the
fourth quarter of 2016. A reconciliation of EBITDA to reported net
income and to net cash provided by operating activities can be found in
the financial schedules at the end of this press release.

OLEFINS SEGMENT

The Olefins segment reported income from operations of $179.8 million in
the first quarter of 2017, an increase of $30.6 million compared to
income from operations of $149.2 million in the first quarter of 2016.
This increase was mainly attributable to higher olefins integrated
product margins that were due to higher sales prices for our major
products, and higher polyethylene and ethylene sales volumes, as
compared to the prior-year period, partially offset by higher feedstock
and energy prices. Trading activity in the first quarter of 2017
resulted in a loss of $9.2 million as compared to a gain of $4.1 million
in the first quarter of 2016.

The Olefins segment income from operations of $179.8 million for the
first quarter of 2017 increased $30.3 million from the $149.5 million
reported in the fourth quarter of 2016. The first quarter of 2017
benefitted from higher average sales prices and higher polyethylene and
styrene sales volumes, partially offset by higher feedstock and energy
costs. Trading activity in the first quarter of 2017 resulted in a loss
of $9.2 million as compared to a gain of $11.9 million in the fourth
quarter of 2016.

VINYLS SEGMENT

The Vinyls segment reported income from operations of $71.4 million in
the first quarter of 2017, an increase of $9.3 million compared to
income from operations of $62.1 million in the first quarter of 2016.
This increase was mainly attributable to higher caustic and PVC sales
prices and earnings contributed by Axiall. These increases were
partially offset by 1) unabsorbed fixed manufacturing costs and other
costs associated with the planned turnaround and expansion at the
Calvert City facility that began at the end of March 2017 and other
planned turnarounds totaling approximately $32.0 million, 2) lost sales
associated with such outages, and 3) higher feedstock and energy prices
in the quarter, as compared to the prior-year period.

The Vinyls segment income from operations of $71.4 million for the first
quarter of 2017 increased $33.8 million from the $37.6 million reported
in the fourth quarter of 2016. This increase was primarily due to higher
sales volumes for all of our major products and higher caustic and PVC
sales prices, partially offset by higher energy costs. The first quarter
of 2017 was negatively impacted by the lost sales, lower production
rates, unabsorbed fixed manufacturing costs and other costs associated
with the planned turnaround and expansion of our Calvert City ethylene
unit and other planned turnarounds that occurred in the quarter. The
first quarter of 2017 benefitted from lower integration-related expenses
compared to the prior quarter.

The statements in this release and the related teleconference
relating to matters that are not historical facts, such as statements
regarding future benefits of our investments and potential synergies are
forward-looking statements. These forward-looking statements are subject
to significant risks and uncertainties. Actual results could differ
materially, based on factors including, but not limited to: general
economic and business conditions; the cyclical nature of the chemical
industry; availability, cost and volatility of raw materials and
utilities, including natural gas and natural gas liquids from shale
production; the price of crude oil; uncertainties associated with the
United States and worldwide economies, including those due to global
economic and financial conditions; governmental regulatory actions,
including environmental regulation; political unrest; industry
production capacity and operating rates; the supply/demand balance for
Westlake's products; competitive products and pricing pressures; access
to capital markets; technological developments; the effect and results
of litigation and settlements of litigation; operating interruptions;
Westlake’s ability to realize anticipated benefits of the Axiall
acquisition and to integrate Axiall’s business; and other risk factors.
For more detailed information about the factors that could cause actual
results to differ materially, please refer to Westlake's Annual Report
on Form 10-K for the year ended December 31, 2016, which was filed with
the SEC in February 2017.

Use of Non-GAAP Financial Measures

This release makes reference to certain "non-GAAP" financial
measures, such as EBITDA, as defined in Regulation G of the U.S.
Securities Exchange Act of 1934, as amended. We report our financial
results in accordance with U.S. generally accepted accounting principles
("U.S. GAAP"), but believe that certain non-GAAP financial measures,
such as EBITDA, provide useful supplemental information to investors
regarding the underlying business trends and performance of the
company's ongoing operations and are useful for period-over-period
comparisons of such operations. These non-GAAP financial measures should
be considered as a supplement to, and not as a substitute for, or
superior to, the financial measures prepared in accordance with U.S.
GAAP. A reconciliation of EBITDA to reported net income and to net cash
provided by operating activities can be found in the financial schedules
at the end of this press release.

Westlake Chemical Corporation Conference Call Information:

A conference call to discuss Westlake Chemical Corporation's first
quarter 2017 results will be held Tuesday, May 2, 2017 at 11:00 a.m.
Eastern Time (10:00 a.m. Central Time). To access the conference call,
dial (855) 760-8160, or (704) 288-0624 for international callers,
approximately 10 minutes prior to the scheduled start time and reference
passcode 6922861.

A replay of the conference call will be available beginning two hours
after its conclusion until 11:59 p.m. Eastern Time on Tuesday, May 9,
2017. To hear a replay, dial (855) 859-2056, or (404) 537-3406 for
international callers. The replay passcode is 6922861.

Earnings per common share attributable to Westlake Chemical
Corporation:

Basic

$

1.07

$

0.94

Diluted

$

1.06

$

0.94

WESTLAKE CHEMICAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31,

2017

December 31,

2016

(In thousands of dollars)

ASSETS

Current assets

Cash and cash equivalents

$

372,591

$

459,453

Accounts receivable, net

1,003,966

938,743

Inventories

821,708

801,100

Restricted cash

9,328

160,527

Other current assets

43,695

48,493

Total current assets

2,251,288

2,408,316

Property, plant and equipment, net

6,392,745

6,420,062

Other assets, net

2,080,797

2,061,875

Total assets

$

10,724,830

$

10,890,253

LIABILITIES AND EQUITY

Current liabilities (accounts payable and accrued liabilities)

$

943,431

$

1,033,742

Current term loan, net

—

149,341

Long-term debt, net

3,601,642

3,678,654

Other liabilities

2,146,925

2,136,471

Total liabilities

6,691,998

6,998,208

Total Westlake Chemical Corporation stockholders' equity

3,659,196

3,523,629

Noncontrolling interests

373,636

368,416

Total equity

4,032,832

3,892,045

Total liabilities and equity

$

10,724,830

$

10,890,253

WESTLAKE CHEMICAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended March 31,

2017

2016

(In thousands of dollars)

Cash flows from operating activities

Net income

$

144,710

$

128,936

Adjustments to reconcile net income to net cash provided by
operating activities:

Depreciation and amortization

150,269

65,714

Deferred income taxes

(6,273

)

58,637

Other balance sheet changes

(131,312

)

(124,352

)

Net cash provided by operating activities

157,394

128,935

Cash flows from investing activities

Additions to property, plant and equipment

(134,285

)

(136,328

)

Additions to cost method investment

(15,000

)

—

Proceeds from sales and maturities of securities

—

26,859

Purchase of securities

—

(36,637

)

Other, net

1,266

(1,115

)

Net cash used for investing activities

(148,019

)

(147,221

)

Cash flows from financing activities

Dividends paid

(24,656

)

(23,700

)

Distributions to noncontrolling interests

(4,463

)

(3,985

)

Proceeds from drawdown on revolver

50,000

—

Restricted cash associated with term loan

154,000

—

Repayment of term loan

(150,000

)

—

Repayment of notes payable

(2,469

)

(7,095

)

Repayment of revolver

(125,000

)

—

Other, net

2,909

1,659

Net cash used for financing activities

(99,679

)

(33,121

)

Effect of exchange rate changes on cash and cash equivalents

3,442

3,858

Net decrease in cash and cash equivalents

(86,862

)

(47,549

)

Cash and cash equivalents at beginning of the period

459,453

662,525

Cash and cash equivalents at end of the period

$

372,591

$

614,976

WESTLAKE CHEMICAL CORPORATION

SEGMENT INFORMATION

(Unaudited)

Three Months Ended March 31,

2017

2016

(In thousands of dollars)

Net external sales

Olefins

$

542,995

$

431,020

Vinyls

1,399,621

544,167

$

1,942,616

$

975,187

Income (loss) from operations

Olefins

$

179,817

$

149,235

Vinyls

71,441

62,116

Corporate and other

(15,960

)

(9,075

)

$

235,298

$

202,276

Depreciation and amortization

Olefins

$

41,040

$

28,697

Vinyls

107,273

36,287

Corporate and other

1,956

730

$

150,269

$

65,714

Other income (expense), net

Olefins

$

1,370

$

1,513

Vinyls

3,878

(1,519

)

Corporate and other

(177

)

2,651

$

5,071

$

2,645

WESTLAKE CHEMICAL CORPORATION

RECONCILIATION OF EBITDA TO NET INCOME AND

TO NET CASH PROVIDED BY OPERATING ACTIVITIES

(Unaudited)

Three MonthsEnded December 31,

Three Months Ended March 31,

2016

2017

2016

(In thousands of dollars)

Net cash provided by operating activities

$

289,692

$

157,394

$

128,935

Changes in operating assets and liabilities and other

(189,636

)

(18,957

)

58,638

Deferred income taxes

5,233

6,273

(58,637

)

Net income

$

105,289

$

144,710

$

128,936

Add:

Provision for income taxes

9,188

55,883

69,300

Interest expense

42,507

39,776

6,685

Depreciation and amortization

150,473

150,269

65,714

EBITDA

$

307,457

$

390,638

$

270,635

WESTLAKE CHEMICAL CORPORATION

SUPPLEMENTAL INFORMATION

Product Sales Price and Volume Variance by Operating Segments

First Quarter 2017 vs. First Quarter 2016

First Quarter 2017 vs. Fourth Quarter 2016

Average Sales Price

Volume

Average Sales Price

Volume

Olefins

+20.1

%

+5.9

%

+7.4

%

+8.0

%

Vinyls

+8.8

%

+148.4

%

+3.4

%

+7.3

%

Company

+13.8

%

+85.4

%

+4.5

%

+7.5

%

Average Quarterly Industry Prices (1)

Quarter Ended

March 31,

June 30,

September 30,

December 31,

March 31,

2016

2016

2016

2016

2017

Ethane (cents/lb)

5.3

6.8

6.3

8.0

7.8

Propane (cents/lb)

9.1

11.7

11.2

13.7

16.9

Ethylene (cents/lb) (2)

21.1

25.9

32.5

28.2

31.2

Polyethylene (cents/lb) (3)

60.3

67.0

68.7

65.3

67.3

Styrene (cents/lb) (4)

58.0

65.2

66.8

69.3

85.6

Caustic soda ($/short ton) (5)

582.5

611.7

660.8

725.0

733.3

Chlorine ($/short ton) (6)

285.0

296.7

304.2

305.0

305.0

PVC (cents/lb) (7)

49.8

55.5

56.5

57.2

60.2

________________

(1)

Industry pricing data was obtained from IHS Chemical. We have not
independently verified the data.

(2)

Represents average North American spot prices of ethylene over the
period as reported by IHS Chemical.

(3)

Represents average North American net transaction prices of
polyethylene low density GP-Film grade over the period as reported
by IHS Chemical.

(4)

Represents average North American contract prices of styrene over
the period as reported by IHS Chemical.

(5)

Represents average North American undiscounted contract prices of
caustic soda over the period as reported by IHS Chemical.

(6)

Represents average North American contract prices of chlorine (into
chemicals) over the period as reported by IHS Chemical.

(7)

Represents average North American contract prices of PVC over the
period as reported by IHS Chemical. Effective January 1, 2017, IHS
Chemical made a non-market downward adjustment of 15 cents per pound
to PVC prices. For comparability, we adjusted each prior-year
period's PVC price downward by 15 cents per pound consistent with
the IHS Chemical non-market adjustment.